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05/21/2010

Ike’s neighbors want $1 million from him to stay in business  »

You read that right. According to the New York Times' Bay Area blog, Ike's neighbors have laid out their demands, and they're ridiculous, bordering on extortion. Doubting that any demands could be that ridiculous, I went down to Ike's Place and talked to him in more detail. So here are the facts, according to Ike.

Ike’s neighbor dispute is between Ike and the two couples living in the two apartments above him. The two couples are renters, sharing a landlord with Ike. The neighbors on either side are either supportive or neutral, and many are his regular customers.

There are three separate legal actions taking place: the eviction, a small claims case with one couple, and the settlement demands discussed in the Times blog post. We’ll call the two couples A (small claims case couple) and B (million-dollar-demand couple).

In the small claims case, Ike had engaged in settlement discussions, but A stopped responding. The court date is July 1, and damages in small claims are limited to $7,500. If Ike were to lose the case, A could still open another case outside of small claims for additional damages.

The “$1 million” demand is one of four possible settlement options presented to Ike by couple B:

  • Ike must “drastically” adjust hours and business practices, as defined by couple B. Ike must sign over to B the backyard and garage that he leases from the landlord. In addition, Ike must pay $250,000 to couple B.
  • Ike stays, changes nothing, and pays $800,000 to couple B.
  • Ike stays and pays nothing, and couple B sues Ike in court.
  • Ike leaves and pays $200,000 to couple B.

Remember, these aren’t the landlord’s demands. If the landlord successfully evicts Ike, Ike would still have to either pay $200,000 or face a lawsuit, in addition to his legal fees from the eviction—a tall order for a business that only broke even in December.

Ike plans to fight the eviction in court (no court date has been set at this time) realizing that the alternative would mean immediately laying off his staff. The grounds for the eviction? “Nuisance.” But according to Ike, he’s been inspected and visited by various city departments over 40 times, including the health department, the building department, and the San Francisco Police Department. He has never received a single citation—not even on the air quality inspections.

The permit complaint is about air quality. As a remedy, Ike installed a ventilation hood over his kitchen area in January, which was fully permitted by the city. However, the neighbor complained to the landlord before the final inspection, and the landlord ordered Ike to halt all construction on the hood. As we spoke, the hood was installed and turned off.

In other words, the legal grounds for the eviction are nothing more than a pretense for evicting Ike. If they really cared about the air quality and permit issue, they wouldn’t have stopped Ike from finishing construction on the hood.

An interesting twist to the story? Who-Wants-to-Be-a-Millionaire couple B moved into their apartment 19 years ago, at which time Ike’s was a noisy bar, where loud music would rattle through the house, sometimes as late as 3 a.m. The noisy bar is why their rent is so cheap, and probably explains why they’re so reluctant to give up 19 years of rent control. But I don’t know what explains the $800,000 demand. Leverage? Greed? Who knows. All I know is that $800k would get you a pretty nice place in quiet Walnut Creek. City living isn’t for everyone, after all.

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